Brussels, 19/09/2011 (Agence Europe) - Greece will have to introduce new austerity measures if it fails to meet its 2011 public deficit reduction targets (reducing the debit from 10.5% to .7.5% of GDP), explained EU Economic and Monetary Affairs Commissioner Olli Rehn on Monday 19 September. New measures will be required to plug any gaps that may be noted, he said, but at this stage the Commission is not asking for any more than has been agreed under the Greek aid programme. Concern reared its ugly head on the money markets again on Monday because the meeting of EU finance ministers in Wroc³aw (Poland) on Friday and Saturday failed to reach any tangible decisions (see EUROPE 10454).
At a conference in Athens on Monday, an International Monetary Fund expert said that extra measures would have to be introduced to reduce the Greek deficit, reports Dow Jones, and Greek media report on doubts by the international creditors (the European Commission, the IMF and the European Central Bank) about whether the recent measures announced by the government, like a one-off property tax, would plug the nearly €2bn hole in the budget this year (see EUROPE 10450).
The need for new measures in the form of new taxes or cuts in spending will be decided upon by the international creditors, whose fact-finding experts have not yet returned to the Greek capital. They held a videoconference with Greek Finance Minister Evangelos Venizelos, however, to discuss the economic situation now that the country is in deep recession (with GDP shrinking by 5.3%), and might return to Greece in the next few days. International budget experts are already helping the Greek government prepare it draft budget for 2012. On Sunday, Venizelos said that the primary budget was expected to be in surplus for the first time. Greece must meet its budget commitments if it is to receive the next batch of aid, to the tune of €8bn, from the first Greek bailout and the ECOFIN Council of Tuesday 4 October will decide whether the next instalment can be paid out, basing its decision on a report from the fact-finding mission, to prevent Athens from defaulting on its debt. As a sign of the government's determination to do all it takes to keep its promises, Greek Prime Minister George Papandreou has cancelled plans to travel to the United States for the United Nations Assembly General meeting and for a meeting with the head of the IMF, Christine Lagarde. (MB/trans.fl)